Zomato Share Price : Will it ever touch Rs. 100 again?

Zomato Share Price
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Zomato Share Price: Latest news

Zomato shares fell on profit booking after a recent rally on Wednesday. The stock closed 4% down at Rs 4% down at 62.10 on NSE. Earlier this week, Zomato had rallied after an announcement by Fidelity International that it had bought a 5% stake in Zomato through the open market. 

According to a statement to the stock exchange, Fidelity’s along with its subsidiaries acquired about 40 crore shares, or 5.06% stake in Zomato on August 18 from the open market. 
Zomato share price: What is happening?

Zomato share price has been on a free-fall since touching its 1-year high of Rs. 160 per share in November. Last month, the share touched its lifetime low share price of Rs. 40.50 per share. Zomato share has wiped off approximately Rs. 97,000 crores of investors' wealth since its listing in July 2021.

Quick fact: Zomato's share price has been impacted the worst among tech-driven platform-based listed companies in India. The share price is down more than 70% from its 1-year highs.

Let's deep-dive into Zomato share price movement:

Why is Zomato share price falling?

Zomato share price has been impacted by many negative reasons - a few of these are 

  • Ongoing losses in Zomato's financials, 
  • Acquisition of loss-making blinkit, 
  • Less transparency of business disclosures, 
  • Negative sentiments around its in-organic growth strategies, 
  • 5% GST hurting the profits
  • Lock-in getting over for pre-IPO investors to sell the stock

Today (25th July 2022), Zomato share price has fallen by double-digit to touch the new 1-year low amid fears of selling by large institutional investors. The lock-in for these investors to sell the Zomato shares got over today.

Zomato Share Price Insight

Out of 250 trading that Zomato stock has been listed on exchanges, below are the Zomato share price movement insights:

  • Zomato share price ended in green on 108 trading days, out of which 20 days, it gained more than 5%.
  • Zomato share price ended in red on 141 trading days, out of which 22 days, it lost more than 5%.

Update from Zomato's Apr-June 22 earnings

  • Loss narrows: Zomato’s consolidated loss reduced to ₹185.7 crore in the quarter ending June 30, 2022 (Q1FY23) period compared to a loss of ₹356.2 crore in the same quarter last year. The company had posted a loss of ₹359.7 crore in the preceding quarter. These losses were attributable to the owners of the company.
  • Revenues jump: Consolidated revenue stood at ₹1,413.9 crore in Apr-Jun 22 rising by a whopping 67.44% from ₹844.4 crore in the same period of last year and also increased by 16.68% from ₹1,211.8 crore in Jan-Mar 22 period.
  • Robust jump in Gross Order Value: Growth in revenue was driven by a) ~10% QoQ growth in Gross Order Value (“GOV") to Rs 6,430 crore during the period and growth in revenue per order. GOV growth was in turn driven by robust growth in order volumes and mild growth in average order values as compared to the previous quarter.
  • EBITDA loss narrows: Overall, adjusted loss in EBITDA narrowed to ₹150 crore in versus ₹220 crore in the previous quarter. 
  • Food-delivery business breaks-even at EBITDA level: "On the profitability front, the food delivery business hit an important milestone last quarter by getting to Adjusted EBITDA break-even. Contribution as a % of GOV increased to 2.8% in Apr-Jun 22 as compared to 1.7% in Jan-Mar 22 driven by improvements on both cost and revenue side, as we had indicated in the past,” said the company.

Zomato Share Price : What's the latest?

Brokerages will be updating their share price target on Zomato post Apr-Jun 22 earnings on August 1st.

For other latest updates, check out the links:→

Should you Buy, Sell or Hold Zomato stock?

JPMorgan: The brokerage firm said adjusted Ebitda losses continued to decline for Zomato and that gross order value (GOV) saw strong growth as orders came back. It added that the food delivery revenues rebounded for Zomato in the March quarter. It suggested a price target of Rs 130 on the stock.

Citi: The firm has a target of Rs 80 on the stock as it revised its estimates to incorporate FY22 numbers. It also talked about a 6% sequential growth in GOVs and a fall in adjusted Ebitda losses to Rs 220 crore.

Brokerage firm HSBC Securities India said the potential merger of Blinkit with Zomato will provide the online grocer access to the food delivery aggregator’s customers while enabling Zomato to enter the online grocery market, which has a larger total addressable market.

Brokerage firm BofA Securities said that the deal could be a negative for Zomato in the near term. It believes Zomato’s capital infusion in Blinkit would lead to higher losses for the food aggregator. 

Brokerage firm Citi has maintained a ‘Buy’ rating on Zomato post Blinkit deal with the target price of Rs 118. 

Kotak Institutional Equities has cut down the share price target to Rs 77 post the acquisition announcement. Earlier, it has given a target price of Rs 83 per share. As per the firm, E-grocery economics have been tough to crack given price competition, relatively lower-margin nature of the category, a high number of products per order which need efficient fulfillment, and very high competition. It added that with a large upfront investment, the firm doesn't see immediate value accretion from the Blinkit acquisition.

 

The stock recommendations in this blog are by the respective research analysts and brokerage firms. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.

 

Zomato share price target (2022)

Zomato share price target (2022) has been in the range of 70 to 130 per share by various brokerage houses.

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